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Can You Achieve Global Parity of Employee Benefits? 5 Key Drivers and 7 Strategies For Companies to Adopt

London 16th May 2024
As businesses become increasingly global, the drive towards global parity of employee benefits, the notion of equity across varying jurisdictions, has gone from being an idealistic aspiration to a strategic imperative.

Global parity makes it easier to harmonise providers and brokers which in turn would help companies to leverage numbers and pool risk benefits for better underwriting. This would reduce costs for businesses. Anton Seatter, Senior Director – Employer Solutions, looks at the drivers and strategy needed to achieve global parity:

 

The drivers of global parity include:

1. Talent acquisition and retention

In the fierce competition for talent, companies continually look for anything that gives them a competitive advantage. Changes in working practices in the wake of COVID-19 – the rise in remote work and international hiring – has only exacerbated this. Employment trends such as the “Great Resignation” and “quiet quitting” underscore the higher demand for workplace fairness and consistency. Transparency fostered by the internet and employer comparison platforms like Glassdoor hold companies accountable to potential discrepancies in practices across jurisdictions.

 

2. Diversity, equity, and inclusion (DE&I)

DE&I was a buzzword for a long time, but it is now central to the strategic thinking of many businesses as they recognise that a diverse workforce is a strong workforce.

Equity, which advocates for equal treatment for all employees, necessitates uniform corporate norms, practices, policies, and outcome irrespective of individuals’ identities or locations. By providing equal benefits, companies send a clear message of inclusion, respecting the diverse needs of their employees across different regions.

Research underscores the importance of DE&I, linking it to a company’s competitiveness and positive return on investment. In the financial year 2020, it was estimated that companies worldwide spent $7.5 billion on DE&I-related efforts, poised to double by 2026. Even though benefits constitute just a fraction of DE&I, being a directly controllable element makes them a prominent success indicator[1].

 

3. Mobility

Despite COVID-19 temporarily curbing mobility, the increase in employee movement is apparent. Companies want to help facilitate mobility by ensuring that remuneration packages resemble an employee’s home country benefits. Though mobility might not be the primary driver, its consideration remains central to many business narratives.

 

4. Corporate brand

A company known for treating its employees well, regardless of location, builds a strong employer brand that can enhance its overall market reputation. Social media has transformed how younger generations behave, often leaning towards responsible brands and companies with inclusive behaviours.

 

5. Regulatory Compliance

Finally, as companies expand globally, they need to navigate a complex web of local labour laws and regulations. Streamlining benefits across locations helps manage the workloads for HR / global benefits teams and mitigates some of the risks around potential non-compliance.

Collectively, the drivers create a compelling case for global parity. However, achieving it is far from easy.

 

The strategies companies are using to achieve global parity include:

1. Benchmarking and Standardisation

Companies are using various benchmarking tools to compare the benefits they offer employees with their peer group and industry standards. This helps them identify gaps and areas for improvement.

 

2. Understanding the workforce

To be successful, benefits need to take into account the needs of different employee locations, cultures and demographics. Companies are engaging their employees in consultative dialogue via multiple feedback channels, including focus groups, employee representative groups and employee surveys. These activities are often supported by external consultants who help companies remain objective in their thinking.

 

3. Global benefits framework

So there is an agreed global standard, companies take the research they have collected to create a global benefits framework guided by broad principles, policies and minimally prescribed standards for all locations. As a starting point, many companies will focus on core benefits so there is a baseline of parity.

 

4. Local adaptations within the global benefits framework:

Recognising that one size does not fit all, companies typically build in flexibility to allow for local adaptations. This approach is designed to respect local customs and practices while maintaining a degree of global consistency. For example, private healthcare in the Nordics – where the state systems is excellent – is likely to have less impact than providing a similar benefit in, say, the USA.

 

5. Communication is key

Clear communication facilitates the successful implementation of any global parity strategy. Benefits management software can help streamline things and ensures consistent message delivery and also helps employees understand where they have left money (in the form of under-utilised benefits) on the table.

 

6. Employee feedback

Engaging employees in the design of benefits programs ensures that their voices are heard and their needs are met. Employee involvement can lead to higher satisfaction and a sense of ownership among employees.

 

7. Continuous monitoring

The global benefits landscape is constantly changing. Companies must regularly review and adjust their benefits offerings to stay current and competitive. This is a continual cycle of progress. As the saying goes “If you’re not moving forward, you’re moving backward.

 

The drive towards global parity in employee benefits is a reflection of the changing dynamics of the modern workforce.

As companies continue to expand internationally, the need for a strategic approach to employee benefits that is fair, competitive, and compliant becomes increasingly critical.

By adopting innovative strategies and remaining adaptable to the diverse needs of their global workforce, companies can achieve this balance and secure their position as employers of choice in the global market.

 

How JTC can help

JTC Employer Solutions has a heritage spanning more than 25 years as a market leader in retirement and reward services.

We make sure employees get the most from their plans – that they feel valued, supported and motivated. We help our clients achieve this for their employees through our efficient global team, strong governance, disciplined risk management and technology enabled solutions.

To find out more, please get in touch with Anton Seatter directly.

 

 

 

[1] 2023 DEI initiatives report: Inside the lighthouses | McKinsey

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